Which is better – equity or debt fund to invest?
Puneet Ahuja, Delhi
It is like salt and sugar question – both are good in moderation and suit certain type of food items that we consume. For instance, salt does not go with milk, just the way sugar does not go with tamarind rice. However, both in varying proportion go well with lime juice. Think of equity and debt in the same way. There is a role played by both the asset classes – equity and debt. Depending on your financial goal, risk tolerance and the years left to achieve the financial goal, you should select investing in equities and/or debt instruments. For instance, if your goal is approaching in the next 2-3 years, consider keeping money in ultra short-term fund or short-term funds. If the goal is 5-7 years to go, consider a balanced fund or diversified equity fund and even an ELSS, in which investments have a three year lock-in and there is a tax relief that one can claim on the investments.
